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Acting Deputy Attorney General Gary G. Grindler Speaks at a World Bank International Meeting

Washington, DC

United States

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Wednesday, December 8, 2010

Thank you very much for that kind introduction.

I want to commend the World Bank for putting together an impressive series of presentations on the important issue of transnational bribery and for remaining, as always, at the forefront of the fight against this global problem.

I am honored to be here today to speak about these issues and to discuss our collective commitment to strengthening the global law enforcement network, ending corruption, and preserving the rule of law around the world.

The struggle against corruption is not limited to any one nation or institution; to any one hemisphere or system of government. It is a concern of special importance to all nations. It is, as President Obama has remarked, “one of the great struggles of our time.”

When the seeds of corruption are planted, the effects are palpable, pernicious – and lasting.

It compromises the rule of law and our citizens’ trust in government and private institutions.

And it corrodes the most basic values and instincts shared by all people.

Let there be no mistake about it: Corruption is a common enemy that all nations must face.

As we have all seen, one of the clearest manifestations of corruption is bribery. While different words are used to describe bribery in different countries, its devastating impact is the same everywhere.

Consider the World Bank’s own estimates of the startling scope of the bribery problem: more than one trillion dollars in bribes paid every year, amounting to three percent of the world economy, and the equivalent of a 20 percent tax on foreign investment.

Yes – more than one trillion dollars.

Today, given the current economic climate, bribery is an even greater concern than it has been in the past. The calculus, unfortunately, is simple: When there are fewer business opportunities, there are more temptations to resort to bribery in order to secure business ahead of competitors – rather than rely on legitimate means like innovation, efficiency, and quality.

Some have even suggested that there may actually be cost incentives for companies that avoid proper compliance with anti-bribery laws.

But the reality is that, in the long-term, bribery only hurts business.

It inflates costs by extracting a tremendous shadow tax. Of course, the problem is that the beneficiaries of this insidious tax are the few and the corrupt – not the many – and not our citizens.

Bribery also stifles competition, effectively shutting out many legitimate companies from the bidding process. Good companies – which are constantly developing innovative, high-quality, competitively priced products and services – suffer. When bribery influences the bidding process, it is bribery, not legitimate competition, that can become the deciding factor. Simply put, the market process is derailed.

Bribery also far too often results in little or no benefit to the contractual bargain. Companies that secure contracts through bribery may simply choose not to comply with their contractual obligations. This is because the bribe recipient is all too often interested in simply getting the bribe, not in making sure contract obligations are fulfilled.

This problem is perhaps most evident in the realm of public expenditures – expenditures by governments, by multilateral development banks, and by non-governmental organizations. These institutions expend tremendous sums in public funds to aid the neediest in our global society.

But when bribery infects this process, critical public projects can end up being completed in ways that are unsatisfactory, or even dangerous. They can also end up not being completed at all. These may be the most crucial projects to developing countries, to developing infrastructure and, as a result, impacts the country the most and can be devastating to a country.

Indeed, bribery disrupts the good and proper functioning of governments. Where there are bribes, there is all too often a consolidation not just of market power, but of political power as well. Bribery can also be one of the first symptoms of a democracy infected by corrupt organizations, such as international organized crime groups whose very end goal may be to control government.

In short, bribery is the antithesis of the rule of law. And the rule of law is also the only true solution to bribery. Anti-bribery laws must be enacted where they have not, and those laws must be enforced where they are not. It is that simple.

It is precisely because of that very simple equation that the United States has made combating bribery through the rule of law a top priority. Specifically, we have attacked the problem through three principal means:

strong enforcement of domestic laws,

extensive education efforts concerning those laws, and

international coordination of our multi-faceted anti-bribery efforts.

First, the United States has dedicated significant resources to enforcement of its anti-bribery laws. We have attacked bribery domestically and internationally. The principal statutory provision we have used in the global markets is the Foreign Corrupt Practices Act, the FCPA. Since the signing of the Organisation for Economic Co-operation and Development Convention in 1998 (the “OECD Convention), the Department of Justice has pursued hundreds of FCPA investigations. We have recently dedicated even more resources to this area, resulting in criminal charges against scores of large and small corporations and individuals including corporate executives, third party agents, and even politicians.

Last year and this year combined, for example, the Department of Justice has charged more than 50 individuals and collected nearly $2 billion in fines and forfeiture. Today there are approximately 35 defendants awaiting trial on FCPA charges in the United States.

We have used every available investigative technique to pursue these FCPA cases. One of these techniques is the use of undercover law enforcement agents. Recently, for example, federal agents, working undercover, found widespread corruption in the military products industry, and carried out a sting operation against 22 executives and employees, the largest single prosecution of individuals in the FCPA’s 33-year history.

Another important component of our enforcement efforts is corporate self-disclosure and cooperation. We have given corporations who self-disclose or cooperate in our FCPA investigations meaningful benefits. A few weeks ago, for example, we resolved FCPA allegations in the freight forwarding industry involving Panalpina World Transport; its U.S. subsidiary, Panalpina Inc.; and five oil and gas service companies and their subsidiaries. The Panalpina case highlights the benefit of corporate cooperation in anti-bribery policy: the possibility of industry-wide scrutiny and resolution of corrupt practices in multiple companies.

Beyond use of the FCPA, we are pursuing anti-corruption law enforcement in other ways as well, such as through the Justice Department’s Asset Forfeiture and Money Laundering Section (known as AFMLS). AFMLS recently announced a new Kleptocracy Asset Recovery Initiative, which will target and recover proceeds of foreign official corruption that have been laundered into or through the United States. In November of last year, at the Global Forum on Fighting Corruption and Safeguarding Integrity, in Qatar, Attorney General Holder pledged to redouble the U.S. commitment to recovering foreign corruption proceeds.

The Kleptocracy Initiative is one significant step toward fulfilling that commitment. Once fully implemented, the Initiative will allow the Department to recover assets on behalf of countries victimized by high-level corruption and restore those assets to their rightful owners. Already, AFMLS has taken action, filing civil forfeiture complaints to seize U.S. based assets of one foreign leader, the former president of Taiwan, who was convicted on bribery charges in his home country, and who bought the seized U.S. assets with the proceeds of bribery.

In sum, our FCPA Unit and AFMLS are working together to ensure that the full force of our laws regarding forfeiture, fines, and restitution are brought to bear on corrupt actors.

Second, education is a critical component of our anti-bribery efforts. We constantly seek to raise awareness in the business community, and we emphasize the importance of the rule of law, and complying with it.

Through our unique Opinion Release Procedure, the Department of Justice also advises companies and individuals on how to comply with the FCPA, and earlier this year we launched an enhanced FCPA website, which serves as a single location for information and guidance regarding the FCPA. This website, which is accessible worldwide and was recently updated, includes the text of the FCPA in fifteen languages, making it immediately accessible to more than two billion people.

Above all, the goal of these extensive outreach efforts is to raise awareness about the illegality of foreign bribery, and fundamentally transform the compliance culture of corporations around the globe.

Finally, the third essential ingredient in U.S. anti-bribery efforts is international cooperation. Time and time again, we see our partnerships across the globe yielding significant results in bribery cases. We have held individuals and companies accountable in a wide array of cases, ranging from bribes paid in obtaining security supply contracts with the United Nations, to energy contracts in Iraq and Nigeria, to telecommunications work in Haiti.

Our resolutions of the BAE Systems and Innospec cases earlier this year are also clear examples of the Department of Justice benefitting substantially from coordination with its foreign partners – and in both of those particular cases from coordinating with the U.K.’s Serious Fraud Office.

The best results can only be achieved by working together.

Looking forward, the future of international cooperation will be based on our countries’ partnerships which are critical to the transnational approach that is necessary to combating foreign bribery. The good news is that today, on the global stage, there is more coordination, more information sharing, and more attention being paid to these issues than ever before.

The World Bank is a global leader in this fight, and we are working more closely with them than ever before. We congratulate the World Bank and the many other multi-lateral development banks (MDBs) that together in April announced the global cross-debarment agreement.

The concept behind the agreement is simple and powerful: anyone caught engaging in corrupt practices in any MDB-financed project is barred from any future project financed by an MDB signatory.

We have taken action to assist MDBs in their efforts to combat corruption by requiring companies resolving FCPA matters to fully cooperate with MDBs investigating corrupt payments. We should encourage other MDBs to join in this initiative, and also encourage our global law enforcement partners to coordinate with signatories to share information so that the debarment initiative has maximum impact.

We also applaud the work of World Bank President Robert Zoellick and Managing Director Dr. Ngozi Okonjo-Iweala in creating the Stolen Asset Recovery Initiative, or StAR.

The purpose of StAR is to support, through assistance and education, the recovery of assets stolen by kleptocrats.

We were honored that the Department of Justice’s AFMLS section worked together with the World Bank recently on two important StAR educational initiatives: the Good Practices Guide to Non-Conviction Based Asset Forfeiture, and StAR’s book on Politically Exposed Persons. Ultimately, we hope that those materials will be broadly disseminated and eventually serve as valuable resources for member countries.

When high-level corrupt officials cannot be reached through typical enforcement actions, other tools, such as non-conviction-based forfeiture can become an essential, even exclusive, means of taking back illicit proceeds. These types of action can be highly effective, as our own experience has demonstrated. We believe much more work can be done to enhance these efforts, and we stand ready to help.

Creation and enforcement of other multinational agreements and initiatives on bribery is also receiving greater attention. Thirty-eight countries are now parties to the OECD Anti-Bribery Convention, and the OECD’s Working Group on Bribery is helping to fully engage countries in the fight against bribery through country monitoring and extensive follow-ups. The World Bank plays an important role in that process, participating as an observer.

The United States this year completed the intensive OECD review of its own anti-bribery programs, and was commended for its enforcement program and the high level governmental support of anti-bribery efforts.

Numerous other international groups are also making tremendous contributions in fighting corruption and bribery, and more and more conferences are being convened to share ideas and forge relationships. The Global Forum, events organized by Transparency International, the International Anti-Corruption Conference, which occurred in Thailand just a few weeks ago, as well as the important conference in which we are all participating here today, are leading examples of these efforts.

But there is also much more work to be done before our partnerships are as inclusive – and as strong – as they must be. Just a few weeks ago at the G-20 Summit in Seoul, Korea, President Obama joined other G-20 leaders in releasing a comprehensive Action Plan to strengthen anti-corruption efforts worldwide. As the United States noted at that time, the central challenge now is not in figuring out what needs to be done. The challenge is to implement known anti-bribery regulations so that the rule of law is developed and maintained.

We here today should likewise take advantage of the extraordinary opportunity of this conference and take action. Tangible steps should be taken today to enhance anti-bribery efforts. Participants here, today, should:

expand the signatories to, and support ratification of, the United Nations Convention Against Corruption;

enter into other creative and effective multilateral agreements like the cross-debarment initiative; and

plan and carry out initiatives to educate the citizenry of all affected nations about the problem of corruption and bribery and how to combat it;

All of these, I believe, are critical ingredients in defeating corruption and bribery, and protecting and enhancing the rule of law around the world.

Finally – and most fundamentally – the fight against corruption and bribery must also strike at the root causes of the problem. Multinational efforts are necessary to foster stable markets and stable governments, and MDB-financed initiatives around the world are a crucial component of those efforts.

Those initiatives should more and more consider the need for building stronger justice systems in countries victimized by corruption and bribery. Providing the means to form workable legal frameworks and a core of well-trained and independent prosecutors and judges is essential.

Other key ingredients include technical assistance, training and education initiatives to resist the culture of bribery, and the encouragement of reporting of corrupt actors. MDB-financed projects that seek to secure those very tangible goals will, in the end, ensure that MDB funds spent on other critically important projects are being spent as they should.

Only by working together, across borders and jurisdictions, can we stamp out corruption. And only by working together will the promise of democracy be fulfilled, and will the rule of law be respected, across the globe. We should not, and must not, settle for anything less.

I am confident that, through the combined effort of the many distinguished guests among you, we can take breakthrough steps here – today – toward achieving that vision – while staying true to those precious ideals that bind us across cultures and countries – and bring us together in the name of justice for all human beings.